tag:blogger.com,1999:blog-6616959642391988608.post7698866213062142864..comments2016-12-08T19:44:51.807-08:00Comments on Calafia Beach Pundit: Declining swap spreads are very bullishScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-6616959642391988608.post-82117245035942886532010-06-16T08:26:11.470-07:002010-06-16T08:26:11.470-07:00REW: I don&#39;t think they are critical of CDS pe...REW: I don&#39;t think they are critical of CDS per se, rather they are critical of the assumption that a CDS market (or any derivatives market) can be efficient or a sign of efficiency. The CDS concept is sound, but the CDS market can be abused, especially if the government gets involved (e.g., tipping the scales, p. 227). <br /><br />Swap spreads are indeed similar to credit default spreads, in that they are both derivative markets. One big difference, however, is that the swap market is much larger and more generic. A 2-yr swap uses 2-yr T-Notes as its defining security—huge in size—whereas a CDS contract uses a single corporate bond or a basket of corporate bonds as its underlying security.<br /><br />Nevertheless, I think they would agree that even generic swap spreads can fall victim to inefficiencies. But that doesn&#39;t mean they aren&#39;t viable.Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-34123315250795671072010-06-16T06:17:23.377-07:002010-06-16T06:17:23.377-07:00Scott,
I know you read Panic by Redleaf and Vigila...Scott,<br />I know you read Panic by Redleaf and Vigilante. I am just getting to it, but my understanding is they are critical of CDS as a measure of risk. Are they criticizing the same swaps spread you mention here?<br />Thanks as always for a great blog.<br />RussREWhttp://www.blogger.com/profile/04596576632760958227noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-72249472572973164352010-06-15T14:18:59.414-07:002010-06-15T14:18:59.414-07:00This comment has been removed by a blog administrator.reeselanehttp://www.blogger.com/profile/04263035990673552749noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-47507977610486863142010-06-15T14:09:58.927-07:002010-06-15T14:09:58.927-07:00bravo to you. you stand by your analysis.bravo to you. you stand by your analysis.septizoniomhttp://www.blogger.com/profile/14253705209662419429noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-12326945125654790892010-06-15T13:27:38.205-07:002010-06-15T13:27:38.205-07:00yesyesScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-79045266646799089492010-06-15T12:50:30.071-07:002010-06-15T12:50:30.071-07:00ok, that&#39;s a very nuanced answer. is your inve...ok, that&#39;s a very nuanced answer. is your investment portfolio most of your wealth (other than your home)?septizoniomhttp://www.blogger.com/profile/14253705209662419429noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-83683774853204925072010-06-15T12:13:00.908-07:002010-06-15T12:13:00.908-07:00My investment portfolio holds no cash, mostly equi...My investment portfolio holds no cash, mostly equities, some corporate and high-yield bonds, and TIPS. I also have decent exposure to real estate and a 30-yr fixed rate mortgage.Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-62817883780617120152010-06-15T11:59:57.721-07:002010-06-15T11:59:57.721-07:00where do you invest your personal wealth, being th...where do you invest your personal wealth, being that you are so bullish, generally? be honest.septizoniomhttp://www.blogger.com/profile/14253705209662419429noreply@blogger.com